In a post-Mifid II world, investment firms and independent researchers reveal that the most likely replacement for large in-house research departments at banks may well be AI. As the new directive forces the buyside to rethink its research consumption, here top asset managers reveal the technology they're exploring
Bankers, independent researchers and lawyers still have questions regarding the costs of unconnected research ahead of the UK’s new IPO rules. All the market participants that spoke to Practice Insight were still confused about the logistics, with only a month to go before implementation
As firms consider the options proposed by regulators, bankers are concerned that early access for external researchers poses a confidentiality breach. But unconnected analysts push back, arguing that it’s on banks to prove they haven’t promised favourable research in exchange for a syndicate position
Market participants call the LSE's new three-month Sonia an "irrelevant" index that no one is using, as enduring ambiguity about the future of benchmarks begins to affect long-dated floating rate bond sales. Here firms reveal the fall-back provisions they are exploring in documentation, though unsurprisingly, there's little consensus
The market is lobbying for CoCo changes. Issuers want to see greater clarity and more harmonisation from regulators, while both buy and sellside are calling for the equity conversion trigger to move higher. Here both buy and sellside sources explain why introducing a higher mandatory threshold would help, while others would like to see a whole new type of AT1..
In a low interest rate environment the high risk products should be flying off the shelves, but despite initial interest, investors and issuers are increasingly seeing them as a structural and procedural minefield. Both sides are turning towards other forms of bail-in debt such as TLAC bonds. Here portfolio managers and in-house bank debt specialists explain why
Droves of new rules twinned with seemingly unending political uncertainty are deterring both debt and equity issuers from listing in Europe, instead gravitating towards Asia or New York. High yield, medium term note programmes and IPOs are especially affected as first-time issuers opt for the path of least resistance
Buyside firms must now consider currency, interest and general market exposures under the new capital requirements regime, as well as setting aside funds for various Brexit scenarios. Many smaller firms are only now performing gap analysis on the new regime, which applies to a large number of companies that will soon no longer be part of the EU
Issuers and bankers voice their concerns about how to apply overnight indices to a forward-looking trade in the same way as Libor. One short-term solution has been to include fallback language in documentation similar to that used in politically risky deals, but there's still significant work to be done. Time is running out
The recently agreed Brexit transitional agreement has caused everyone to relax on CCP relocation despite nothing being set in stone. If pressure isn't consistently applied and euro clearing is forced to move, trades will be more expensive in terms of risk-weighted assets, plus the capital required to support the business would be around 50 times higher.
The debate on clearing plans post-Brexit is heating up on both sides of the Atlantic, but relocating CCPs to New York as implied by the House of Lords will come with additional due diligence checks and various other legal implications. Either way, here UK banks and investment firms explain that the EU is ignoring the real shape of the market, with around 55% made up of US dollars
In-house sources explain how they're looking to avoid managing two separate liquidity pools post-Brexit as a lack of third-country equivalence under CRR and CDR IV looks likely. According to Afme, they'd need to rebook roughly €1.28 billion of assets from the UK to a EU member state if no deal is agreed.
